Last week, the House of Representatives went after SNAP—the supplemental nutrition assistance program that helped 23 million American families to buy food last year, at a daily cost of about $4.50 per head. The House approved program cuts of $40 billion over 10 years, further fraying what is left of America’s social safety net.
The vote came only a few days after the U.S. Census Bureau issued its latest numbers on poverty. Those numbers suggest millions of Americans live on an income that far poorer countries have deemed unacceptable. Rather than grind the poorest of its citizens further into deprivation, the U.S. should guarantee everyone a minimum basic income.
The census numbers (pdf) report that median annual household income in 2012 was $51,017, or about $55 per person per day, given an average household size of just over two and a half people. About 47 million people lived in poverty—for a family of three, that’s a per-person income of about $17 per day. It’s worth noting that these income numbers don’t include in-kind support, such as food stamps, subsidized housing, or health care under such programs as Medicaid. Such programs are a considerable help—SNAP alone reduces the depth of poverty by as much as 10 percent (pdf)—but they still leave a lot of people very poor.
In fact, census data show that many people have fallen a long way below the poverty line. An approximation (based on different size households in a given income bracket with a similar household income) suggests as many as 14 million to 18 million Americans live in households where the income per person is less than $10 a day. Around eight to 10 million live in households where the income is less than $5, and as many as four to six million live in households where daily income is less than $2 per head.
According to analysis (pdf) by Luke Shaefer and Kathryn Edin at the National Poverty Center, counting SNAP support as income might halve the number under the $2 threshold. But this nonetheless implies that at least the bottom 1 percent of Americans probably scrape by on less than that. They’re trying to cover everything from housing to heating, water, school supplies, and food on less than the cost of a drink at Starbucks (SBUX).
The bottom 1 percent in the U.S. live on an income that is one six-hundredth of the average for the richest 1 percent of Americans. They live on less than the average GDP per capita of a low-income country such as Afghanistan, Mozambique, or Haiti. And they live at or below the national poverty lines of such countries as Ghana, Congo, and Mongolia. Despite living in one of the richest countries in the world, the bottom 1 percent of Americans see incomes below the global median. The more successful disabled beggars of Addis Ababa in Ethiopia earn more than $2 on a good day, according to the International Labor Organization.
It is true that from an objective standpoint, living on $2 in a richer country is associated with better outcomes than living on $2 in a poor country—you are more likely to live in a house with basic utilities, and your children are less likely to die. In those terms, extremely poor Americans have it better than similarly poor Ghanaians—especially because the poorest in America will spend more than $2 a day even if their incomes are considerably below that. On the other hand, Ghanaians living on $2 a day are around average in their society; they don’t face the social stigma and exclusion of being so far removed from “normal” living standards.
Despite the physical and social costs of poverty, we have done a terrible job at raising the incomes of the poorest Americans over the past 20 years. The proportion of America’s households that live on less than $15,000 a year is as high as it was in 1989, while the proportion on more than $200,000 has gone up by two-thirds. That may be one reason for the country’s sluggish growth over that time—there is evidence that greater income equality is associated with stronger income growth for all.
There’s a solution to America’s extreme poverty problem. The example of countries where considerable proportions of the population live on less than $2 a day, as well as historical experience in the U.S., show that the most powerful tool to make poor people’s lives better is simply to give them cash. Brazil’s program of cash transfers, called Bolsa Familia, reduced inequality and increased both school enrolment and the number of poor people who were working. Perhaps we should try something similar in the U.S., providing an income floor for all Americans.
A $5 a day transfer to every U.S. citizen, regardless of circumstances, would equate to about 40 minutes of work at the minimum wage, less than one-third of income at the poverty line and about one half of 1 percent of the daily income per head of the richest 1 percent of American households. Such transfers would total $560 billion each year—equal to about three-quarters of the defense budget. But as taxable income, the net cost to the U.S. Treasury would be lower. And the majority of Americans would still be better off if additional taxes were raised to pay for the transfer—their tax bill would rise less than the value of the transfers they received.
So pushing back on the House of Representatives’ efforts to defund SNAP is an important but inadequate part of the agenda to improve the lives of America’s most vulnerable. It’s a travesty for the world’s sole superpower to be home to millions living on less than the poverty line of far poorer countries. Ensuring that all Americans have an annual income commensurate with the average daily income of the country’s 3 million richest people is hardly a lurch toward socialism. And even this modest goal would have a truly dramatic impact on the quality of life of America’s most desperate, which would redound to the benefit of us all.